Article by
Barbados Today

Published on
October 23, 2018

So the story goes, in 1850 the British Chancellor of the Exchequer William Gladstone asked the inventor of the newly-created electric dynamo, Michael Faraday, the practical value of electricity.

“Why, sir, there is every probability that you will soon be able to tax it,” came the physicist’s rejoinder to the minister of finance.

It is an apocryphal story of Faraday’s Folly, to be sure, decades before it began to power a lightbulb.

Yet it makes a point in support of the cynical notion of government as legalized gangster, finding ever new ways to separate citizens from their earnings.

Here at home, consumers’ worst fears are about to be realized, as the Government seizes on our appetite for buying items by laptop and smartphone and having them shipped to us either by courier or cousin, broker or brother.

In a matter of weeks, the tax on online transactions will be here to play its role as Christmas killjoy, even if it is intended for the worthy cause of stemming the foreign exchange bloodletting that continues to shrink our import cover. It has been dubbed the “Amazon Tax”.

Mind you, we are not convinced of the necessity for the tax, beyond the oft-trotted shibboleth of fiscal penury, overshadowed as it is by poor management, incredible waste, abuse and possibly fraud and corrupt gain of the taxpayer’s money.

Our Government has not presented data on online purchases and presumably lost revenue and foreign exchange. It cannot, and most likely will not, calculate the opportunity cost – what Barbados would likely gain if that bauble or widget were obtained here instead.

And it has said nothing about the millions more spirited out of our banking system by well-heeled corporations.

All Barbadians know is that things here are so prohibitively expensive, the range too often limited, and the hassle to obtain them down in town or up at at the mall is too great.

In the worlds of Amazon, eBay, Etsy et al, there are no fatal encounters with shop assistants in default surly and sour mode wearing the permanent scowl.

At the very least, in cyberworld, we are unlikely to encounter the differential treatment applied in increasing order of importance and commensurate attention: black national, returning nation, black non-national, African-American, white national, white tourist and expatriate, to say nothing of other critical variables as gender, perceived wealth, store location or time of day or season.

But we would be derelict in our duty were we to fail to point out that beneficiaries though many Barbadians are of online shopping, there have been, and continue to be, adverse knock-on effects on jobs and business viability here at home.

So it falls to us to urge the local retail community, an amorphous and nebulous entity though it may be, to up its game and join the 21st Century if it, and we, are to survive the rest of it.

There must be a happy balance somewhere, what one supposes the economists would call equilibrium – between selling at the right price and stocking the right stuff – of actually catering to the market’s needs and means.

The Value Added Tax was supposed to have been the tax to end all taxes, a revenue-neutral tax that would level the playing field, and balance the impulse to tax the hell out of the consumers with something approaching fairness.

The thinking was, so we were told, that a fridge would reach a sensible price while the tax base of items and services would broaden sufficiently to offset any revenue loss from a plummeting sticker price as stamp duties and other indirect taxes disappeared. In other words, that fridge would now be in reasonable range (no one seems to remember but large appliances were even more impossibly expensive) while you would now pay a few pennies on the dollar for that personal care product or service.

And yet, budget speech by budget speech, the raft of imposts meant to be eliminated by VAT, have crept back in, with names not out of place in the dystopia of George Orwell’s Nineteen Eighty-Four: “cess”, “environmental levy”, “national social responsibility guilt trip”. And all the while the VAT has crept from 15 per cent to its permanently temporary rate of 17.5 per cent.

Perhaps it is a wakeup call – if even well past noon – for our merchants to get over their Trumpian aversion to science, logic, creativity and innovation, and finally start offering their products online through clever apps and up-to-date websites. Artificial intelligence now makes it possible to enter a keyword search for an item and not only locate it in the shop nearest you but also glean its comparative price, complete with local users’ comments and ratings on both item and emporium.

It’s well past time to put the word ‘service’ in the services trade, to give nonpareil shopping and after-sales attention. It is time our customer service folk, and our Customs officers, end the sloth, bigotry, myopia and disrespect that pass for customer service in this country.

And yes, if we can make them here, then by all means let’s try, and let’s take greater pride in our own industry and buy ‘Made in Barbados’. It is high time we politicize our consumption, too.

As with a great many things in our great little nation, the only limitations are our imagination and our will.

After all, it’s only the future of the domestic economy and the jobs that put food on our own tables daily that may be at stake.

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8 thoughts on “#BTEditorial – Soon cometh the Amazon Tax”

Are the taxes and food prices still rising, or are they falling?
If they are falling, then the present BLP regime is doing a good job; if the taxes and food prices keep going up, nothing has changed, but the people were fooled.

There needs to be clarity as to whether the proposed VAT on Online Transactions is a tax on the goods or on the financial transaction. If it is the latter it will result, with the Foreign Exchange Fee, to an almost 20% tax on such transactions. With regard to goods deliverable to Barbados addresses, the combined VAT on the Online Transaction together with the duties and VAT payable on the goods delivered to customs in Barbados, would make such purchases prohibitive.

On the other hand if the intention is to collect VAT on goods arriving in Barbados it would surely be a straightforward matter of compliance at ports of entry by customs agents employed by FedEx, DHL, BimPak and Post Offices.

I do not know how feasible it is to ask companies such as Amazon, Walmart, Best Buy, to collect the VAT on purchases destined for Barbados. For it to work effectively they would need to have all the duty headings in order to add the VAT after any applicable duties, shipping and insurance. In other words they would become a tax collector for Barbados which l believe they would not agree to and as a sovereign state, is undesirable.

If they only agreed to add VAT to the goods and shipping it would mean that duties and additional VAT would have to be levied at customs in Barbados. To ensure residents were not paying VAT twice some formula would have to be created to reformulate what was due and deduct the amount already paid. I can’t see this being workable.

The commercial banks could be asked to collect the VAT but how would they know whether a purchase is destined to a son/daughter studying abroad or to an address in Barbados. The transaction does not give any details as to where the item/service is being delivered/accessed.

From my understanding both the IMF and Government are in agreement with the need for a comprehensive review of taxation in Barbados. It would seem wise to incorporate such thinking in such a review.

As usual because of a system full of loopholes those that bring in their items legitamitely will now be taxed twice. How is this tax on purchase going to be applied? Will the bank charge it and then show it on a separate line below each transaction on our statement? Will we then be asked to pay it again when we clear the item? Is this not a case of dual taxation then and a breach of WT0 agreement? So many questions and so few answers. Would someone please explain to us the mechanics of how this will work. Finally why don’t the authorities at port of entry simply just not do their job and collect the taxes instead? Don’t worry though their job safe cause we using last in first out so that will help to ensure the old ways remain unchanged and you wonder why we are here.

Forgot a question would the vat I pay on purchase be taken into account when I clear the item legally at which point I would only be asked to pay the balance of vat owed at entry net of what was paid at purchase, or will I now be asked to pay a second vat with
the duty? So many questions that need answers…

JOHN THE CROW; seeing that you are a real DLP sympathizer, can you ask the MOfailure what he would do in 5 months to get the country back on its feet again if they had retained the government, don`t forget they had 10 years and 90 days and the economy keep growing like a cow`s tail, down.